John Keynes once said that the market can stay irrational longer than most retail investors can stay solvent.
Well, we’ll add hedge funds and institutional funds to that lists.
In case you have not heard of the hottest town talks surrounding the market in the recent days, shares of several counters (I purposely mentioned counters rather than companies because it doesn’t matter anymore, they are treated as a pawn right now) such as Gamestop $GME, AMC, BB, Nokia, KOSS have rocketed to escalating levels due to strong ongoing retail demand pushing up the stock.
This post was originally posted here. The writer, Brian Halim is a veteran community member and blogger on InvestingNote, with a username known as @3Fs and has 2261 followers.
Yes, you heard it right.
It’s not big institutional controlling it (though I would argue there might be small hedge funds perhaps who are participating in the party), but rather retailers who lurked around forums such as Reddits, and StockTwits nests and consolidate their purchasing power by pushing up the price.
Now, let’s just take Gamestop for instance.
The company has been a target for short-sellers for a number of years now, and the amount of short-selling volume amounted to more than 140% of the entire floating shares available. The company has started its buyback program for a number of years in the past and therefore has only some 70m floating shares lurking around.
If you theoretically take the number of forumers – Reddit/wallstreetbets/StockTwits users/followers, which is likely to amount to more than 20m, you can essentially have a coordinated orchestra to move the markets. …